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Court date approaches for ‘Axe the tenant tax’ campaign

Thursday 29 September 2016

A vital legal bid to overturn tax changes designed to hit landlords from April next year has been given a court date next month.

The new law – which prevents landlords from deducting mortgage interest costs from their rental income against their tax bill – was announced in the 2015 summer budget, and is set to be phased in from 2017 to 2020.

Some landlords will be eligible for an allowance of up to 20 per cent – but higher and additional rate-paying landlords will be obliged to pay tax on turnover, as opposed to profit.

It is even feared some basic-rate taxpayers could end up in higher tax brackets, even though they will not earn extra income.

The challenge is led by Cherie Blair QC, wife of Tony Blair, and will be heard at London’s Royal Courts of Justice on October 6, when the case for bringing a judicial review will be laid out.

A judge will determine whether or not the challenge can be mounted during the 90 minute ‘permission hearing’.

More than £100,000 has been raised by landlords Steve Bolton and Chris Cooper for the ‘Axe the tenant tax’ campaign.

They are concerned the tax changes will force up rents and leave many landlords with no option but to sell their properties.

The new tax regime will only affect people who own properties in their own name, rather than through a company - and contradicts a European law which forbids Governments from giving preferential treatment to one type of landlord over another.

Mr Bolton is confident that the outcome of the EU referendum will not affect the ruling, as the changes were part of the 2015 Finance Bill and were brought into law eight months before Brexit.

He warned that tenants would ultimately bear the cost as rents will inevitably increase as landlords recalibrate their business models.

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